By MaRico Tippet
No one saw it coming and many were not as prepared as they wanted to be. COVID-19 has wreaked havoc on the U.S. Economy. The stock market has undergone the largest and fastest peak to trough decline in its history. It took the S&P 500 only 22 days to drop 30% from its record high that was reached on Feb 19th. Large, medium, and small businesses across the country have seen their business dry up in a matter of weeks.
In our small and budding community of the greater Vail Area, many businesses are having to make tough choices between keeping employees and putting the business in a position to survive. We have seen many new businesses open their doors in the last two years. These businesses have thrived with the support of the local community. However, the longer this directive of social distancing is in place, the more likely it becomes that some businesses will not be able to recover. With no immediate end in sight, our businesses are in a cash crisis. An influx of cash is needed to solve the liquidity crisis our local small business owners are facing. If you are a business owner and having financial hardships due to COVID-19 these are some things you should do:
- Map out a full financial plan for the next 6 months and take inventory of all assets and liabilities
- Know exactly what your expenses are and where you can cut expenses
- Know exactly how long you can go with current cash on hand
- Look at what changes can be made to extend your cash runway
- Look at how you can restructure your financial situation by working with lenders, banks and advisors
Here is a resource that you should consider:
On March 16, Governor Ducey sent a request for Arizona businesses to receive assistance through Federal Disaster Loans. These loans administered by the SBA are low interest loans available to businesses and non-profits that have been incurred losses to their business or organization due to COVID-19. Here are the specifics for the SBA Economic Injury Disaster Loans:
- Eligible entities may qualify for loans up to $2 million
- Interest rates for loans are 3.75% for small businesses and 2.75% for nonprofit organizations
- Loan terms are up to 30 years
- Loans amounts are based on the size, type and financial resources of the business
- Funds can be used to pay debts, payroll, accounts payable or other bills that could have been paid had the disaster not occurred
- Loans over $25,000 require collateral. However, SBA will not decline a loan for lack of collateral but require borrowers to pledge what is available
- Applicant business must have physical presence in declared disaster area – All Arizona counties are included
- Banks are not involved. These loans are directly from U.S. Treasury
- Go to DisasterLoan.sba.gov
- There is no obligation to take the loan if offered
- SBA must be able to determine applicant business has the ability to repay the SBA loan
Due to the complexity and possible delays of receiving SBA funds, business owners should also consider applying for conventional loans and financing. There will not be a single solution to solve the financial hardships of this crisis. There will likely be other grants, loans and aid provided by the federal government to support our businesses and local economy. If you have any questions or would like any assistance, please don’t hesitate to reach out. You can reach me at info@cwbaz.com or call 520-861.5675
